ELSS tax benefits LTCG return calulation comparison to ppf nps nsc

What is ELSS

ELSS Refers to Equity Linked Saving Scheme type of an equity mutual fund which invests at least 80% of its total assets in equity.

Benefits

Tax Benefit up to 1.5 lakh under Section 80C
Returns: Dividends are tax-free
Long term Capital gain (hold a share up to 1 year) Up to 1 lakh tax-free. more than 1 lakh taxed at 10%.
Low Lack in Period 3 Years. while PPF 15 years. FD 5 years and returns are taxable.
Higher returns up to 18%* may double in 4 years (power of compound interest)
FLexible investment type SIP (monthly/quarterly/weekly)

NOTE: every investment (SIP or Lumpsum) Needs to Complete 3 years maturity.

EX: You started Investing 3 years ago, 1.5 lakhs for a year now you have invested 4.5 lakh in 3 years. But Only the first investment eligible for maturity (because it’s completed 3 years locking period other SIP not).

Why ELSS Lock-in Period 3 Years?

The Lockin Period is 3 years because before budget 2019 3 years LTCG No tax (But Now LTCG 1 year with 10% Tax on above 1 lakh profit). Govt may increase lock-in period up to 5 years because of the huge demand for ELSS But Huge risk& returns too. but indirectly added LTCG 10%. *

Types

Growth Fund: Your investment grows until you opt for redemption or withdrawal. There is a Lock in Period of 3 years.

Divided payout:

1. Dividend Payout options: get returns every year in the form of Dividends. but GOI introduced DDI in 2018 budget

dividend distribution tax DDT at 10 %. your dividends taxed at 10% this lower than returns. this tax in tax not an investor but the company who is paying for you final resulting in lower Value.

2.Dividend Reinvestment: your dividend invested again as fresh investment.

elss vs ppf vs nps

Feature	ELSS	PPF	NPS	NSC
Interest rate	15-18%	8	8	8
Lock in period	3	15	10	5
Tax on returns	No tax up to 1 lakhs remaining 10%	tax-free	60% lump sum withdrawal tax fee annuity taxable	Interest earned
Min investment per year	500	500	1000	100 (only 1 time)
max	1.5 lakh	No limit	No limit	no limit
liquidity	no withdrawal	premature withdrawal after 7 years	after 3 years 25% in certain situations	no liquidity

NPS gives additional tax benefit of 5,000 under 80CCD(1B)

is NSC maturity withdrawal tax-free?

No: but you are taxed on interest on earned on that year. becuase NSC interest Accumulated and reinvested every year. this count as fresh investment claim under 80c.

if your final amount 500000 and interest earned on that is 40,000(it’s taxable)

elss maximum limit under 80c

1.5 lakhs (but overall deduction under 80C including Life insurance, children tuition fee, pff, NPS, ELSS up to 1.5 lakh exempted from tax)

More than this allowed but not claimed extra invested amount.

top 10 elss funds 2019 tax saving

Fund Name	1 Year Returns	3 Year Returns	5 Year Returns	Net Assets (Rs. Crore)
Axis Long Term Equity Fund	5.17%	16.02%	19.36%	16,999
Franklin India Taxshield Fund	5.30%	12.55%	16.36%	3,651
DSP Tax Saver Fund	4.60%	16.45%	18.20%	4,373
Reliance Tax Saver	-5.99%	10.68%	15.36%	9,630
ICICI Pru Long Term Equity	8.20%	15.51%	15.92%	5,386
Aditya Birla Sun Life Tax Relief ‘96	2.07%	16.13%	19.34%	6,628
Invesco India Tax Plan	5.13%	16.62%	18.78%	609
Principal Tax Savings Fund	-1.21%	16.99%	16.30%	374
Tata India Tax Savings	3.66%	16.54%	18.85%	1,417
IDFC Tax Advantage	-3.17%	17.17%	17.87%	1,614

“the returns data is based on NAV of direct growth schemes as recorded on 11th April 2019 and subject to change. Assets Under Management (AUM) data as recorded on 30th September 2018.”

How elss Calculated?

Nature of investment	SIP	SIP	SIP	lump sum
Amount	1000			36000
Frequency /SIP	1 month 1			–
CAGR /Year (expected)	10%*
Duration	12 months	24	3 years	3years
Maturity	12,640.54	26,545.13	41,840.18	47,916.00

Why Elss Returns are low in the 1st year?

What if I stop ELSS before 3 years?

Neither you can withdraw nor you can switch funds from ELSS schemes before completion of 3 years from the date of investment.

Each SIP or lump sum will have its own lock-in of 3 years from its date of investment
you can not withdraw before the lock-in period at any cost at all.
Returns taxed at 10% if more than 1 Lakh.

Can I stop my ELSS SIP?

Yes, you can, but you can withdraw after 3 years only. (NoTe every SIP as a separate investment so the lockin period applies to every SIP, not for entire). minimum SIP period is 6 months.

Canceling happens to remove biller account accounts from bank. 2nd-way login Mutual fund account website and raise a cancel request so there are no charges. but you can not withdraw until the lock-in period.